1 Mn+ Users, 5 Mn Transactions, $1.5 Mn Revenue: How CheQ Is Transforming Credit Management

“We want to be India’s most efficient credit management company, which fundamentally makes us ubiquitous for all things credit,” – Aditya Soni, founder of CheQ.

In July last year, Aditya Soni firmly expressed his belief that his nascent fintech startup CheQ could transform the credit management landscape in India during an interaction with Inc42. And his succinct statement amply captured his vision regarding the startup’s future. 

Bengaluru-based CheQ had been operational for about five months at the time, but the founder claimed it had already amassed a customer base exceeding 4 Lakh. Soni attributed the fintech’s growth to a robust organic marketing strategy, which still keeps its overhead costs low.

In a landscape dominated by popular fintech super-apps like Paytm, PhonePe, Google Pay or Amazon Pay, CheQ champions a unique niche, making credit management super easy for credit cardholders and borrowers paying loan EMIs. Credit card bill payments are also made extra-rewarding for CheQ users. 

Essentially, the fintech startup provides a unified platform to help people streamline monthly payments and monitor their credit scores without the hassles of navigating multiple channels to make payments. (Multiple cardholders having numerous ‘due’ dates and the chances of missing out on a few know the pain point only too well.)

Additionally, in November 2023, it introduced a new rent and education fee payment solution that enables customers to pay their bills using a credit card and in turn, reach their credit card goals and improve their credit score. Customers can easily pay their rent using a credit card in less than a minute, Soni told inc42.

Meanwhile, CheQ has grown more ambitious. Soni is all set to run an overarching credit platform to emerge as the ‘Zerodha’ of credit management. Like Zerodha, one of India’s largest discount brokers with a wide range of investment products, CheQ aspires to attain a similar status for ‘all things credit’. 

For the unversed, CheQ was set up by Soni in 2022 and became operational in February next year (2023). Its flagship is Pay Together, a unique feature allowing users to settle multiple bills through a single transaction. Besides, users are offered a 1% reward on every payment. Rewards come in CheQ Chips, which can be redeemed through vouchers from popular brands (Flipkart, Myntra, Swiggy, Ola, Blinkit, Cleartrip, EaseMyTrip, The Man Company, Wow Skin Science, PVR and more). The in-app currency can also be used to pay subsequent bills on the app.

CheQ’s tech stack has two layers. One is integrated with major banks like ICICI Bank and Axis Bank, allowing users to make direct payments. Plus, there is another layer integrated with payment gateways and aggregators like Razorpay and Cashfree Payments, enabling people to pay multiple credit card bills and loan EMIs to various banks through a single payment window. 

According to Soni, around 38% of CheQ’s users have witnessed a significant improvement in credit scores since onboarding, which serves as a testament to the platform’s effectiveness.

Attaining Zerodha-like eminence in the credit management space is a work in progress, though. Soni believes the startup has only scratched the surface, but its user-centric approach has helped the business scale up fast. 

“We focus on creating features and solutions that resonate with our users and address their credit management needs,” he told Inc42.

CheQ claims to be processing about 2% of all retail credit card transactions every month. According to a Kotak Institutional Equities report, at least 75% of all online transactions are done using credit cards, while the number stands at 50% for offline transactions. The binge augurs well for a startup like CheQ, whose primary focus is credit.

The startup, which was launched on 14th February 2023, started monetising in June 2023 and crossed $1.5 Mn in revenue in December last year, said Soni. As of January 2024, the startup claimed that it was operational profitable, a feat achieved on the back of multiple revenue streams, strong user engagement and cost optimisation.

He further added that the startup currently has an ARR (annual run rate) of 6 Mn and plans to clock 12 Mn in revenue by FY25. 

For its rent and education fee payment solution, the platform has a 1.5-1.6% processing fee in place. CheQ claims that it is one of the lowest fees on rent payments in the market. For comparison, CRED charges a convenience fee of around 1.8%, Mobikwik charges 2% for payments made via credit card and 2.5% for those made using Zip and for PhonePe, the convenience charge is around 2%.

Its performance indicators also suggest that the startup is on the right track. The fintech says it has enabled 5 Mn transactions worth $2 Bn and served more than 1 Mn customers in 12 months. According to Soni, it has a 70% customer retention rate and its annual recurring revenue (ARR) currently stands at INR 35 Cr. 

However, the fintech newbie is looking beyond numbers to create a strong value proposition in an intensely competitive market. The strategy? Combining robust technologies with the trust of incumbent financial institutions. For instance, CheQ has tied up with new-age fintechs such as Kiwi and Fi, global card payment provider VISA and ubiquitous government platforms like the National Payments Corporation of India (NPCI) to ensure seamless operations, but more on that later. 

How CheQ Is Spreading Its Wings With Products & Value-Additions

“Although we are celebrating our success, we recognise that product-market fit (PMF) is not a static milestone but a dynamic state. So, in the larger landscape of scaling up and continuous optimisation, I would place CheQ in the 1 to 10 scale in our journey as we’re still a very young player in fintech,” said Soni.

Given that deep-pocketed rivals like CRED and a host of market-leading fintech super-apps are actively targeting the credit management space, the journey upwards would continue to be tough.

In fact, Soni understood quite early that it would be critical to expand CheQ’s service suite to guide its users throughout the credit lifecycle. So, the startup took a strategic leap and entered the personal loan segment by introducing CheQ Kredit in March 2024. 

While CheQ Kredit is still in its early stages, Soni disclosed that the startup has partnered with a prominent Indian bank (though he didn’t disclose the name) and two NBFCs to provide its users with pre-approved credit offers. He said that the partners bring not just financial heft but a legacy of trust and expansive underwriting capabilities, ensuring a large number of users can benefit from its offerings. “Anyone can avail of the loan as long as our partneris willing to underwrite it,” he added. 

The expansion further aligns with Soni’s aspirations for CheQ to become something akin to Zerodha. The discount stock brokerage unicorn, valued at around $3.6 Bn, has become synonymous with retail investing and offers a variety of trading features and solutions. CheQ aims to replicate this success by tailoring its product stack for new users embarking on credit journeys. 

Adding personal loans to its service bouquet can be a game-changer for CheQ in terms of business expansion and growing partnerships with major banks. According to an Inc42 report on the fintech ecosystem, personal loans dominated the fintech market between April and September 2022, accounting for a 96% and 66% market share in volume and value, respectively, surpassing consumer and business loans.

CheQ’s offerings at a glance:

• Credit Dashboard: Offers a comprehensive view of one’s credit health; the CheQ dashboard tracks credit scores and historical data and suggests actionable steps to improve one’s financial well-being.
• Repayments: An intuitive system that reminds users of upcoming dues and provides a tech stack for near-instant bill settlements; CheQ thus ensures timely payments, zero penalties and no additional interests.
• Rewards: Incentivises responsible credit behaviour; CheQ’s rewards system ensures that managing credit is not just a financial obligation but a rewarding experience.

CheQ’s Growth Philosophy: Collaboration, Not Competition

Despite a crowded market and tough competition, CheQ’s founder believes in strategic collaborations to enhance customer trust in the fintech brand. One good example is its tie-up with the NPCI to integrate numberless flows for credit card repayments.

As most people know, IMPS is a real-time fund transfer service for person-to-person, person-to merchant and person-to-account transactions. In September 2023, CheQ introduced an IMPS-based credit card repayment system that allows people to use their registered mobile numbers and the last four digits of their credit cards to make payments. This reduces the risk of digital fraud as full card details are not shared at any digital touchpoint.

Between September 2023 and November 2023, the fintech startup entered a strategic partnership with VISA. This collaboration allowed anyone holding a VISA debit card, regardless of their bank, to pay off their credit card bills via CheQ without incurring any processing fees.

VISA covers the expenses incurred and even pays a marketing fee to CheQ. And how does VISA benefit from this arrangement? Soni explains, “Our user base consists of high-end credit card holders who maintain an average monthly bill of INR 90K. With the ongoing shift towards UPI usage over debit cards, this partnership lets VISA encourage card-based transactions among its users.'”

CheQ has also joined forces with fintech startups Kiwi and Fi, underscoring its business philosophy of co-operation instead of competition. Bengaluru-based Kiwi offers virtual credit cards and enables UPI payments via phone. People can pay using their credit cards or bank accounts. Fi, based in Bengaluru, is a neobanking startup focussing on credit products. 

With Kiwi, CheQ entered a month-long ad monetisation partnership in August 2023 – creating a win-win deal for both parties. On the other hand, Fi’s partnership with CheQ is similar to VISA and is renewed on a monthly basis, said Soni. 

Soni says this collaborative approach has led to better customer acquisition. Around 20% of CheQ’s user base came through partners and the startup taps into these businesses to reach different demographics. 

“It’s a testament to the strength and appeal of our joint offerings. When a user sees the fusion of CheQ’s innovation with the trustworthiness of a familiar financial entity, they are more inclined to engage and explore our platform,” he added.

Decoding The Reality Of Credit, The CheQ Way

Even in 12 months, the startup has rapidly introduced several tech tools and stacks to drive innovation in sync with a fast-changing fintech landscape. It is now building an expansive educational module (think Zerodha) to demystify credit management. In the next two to three years, CheQ will also develop a community platform where users can share experiences, ask questions and learn collaboratively. 

“The moment someone contemplates their first credit card or loan, manages existing credit or seeks incremental credit boosts, CheQ desires to be the constant, guiding force,” said Soni, underlining the startup’s commitment to making credit not just a financial instrument but a tool to empower people.

As CheQ now enters the lendingtech space with CheQ Kredit, it faces stiff competition from established players like CRED. So can it carve out a niche for itself?

According to Inc42’s report, lendingtech is the third-fastest growing segment in fintech after fintech SaaS and investment tech. Its market size is expected to skyrocket from $270 Bn+ in 2022 to $1.3 Tn+ by 2030, at a 22% CAGR. This rapid growth suggests ample room for new players like CheQ.

CheQ’s strategic collaborations with fintechs and financial institutions also offer a strong foundation. These partnerships not only boost visibility but also diversify revenue streams for the startup through advertising and partnership fees. However, its ability to innovate and deep dive into customer-centricity will ultimately define its future, given its emphasis on user experience.